Frequently asked questions about LETS
Frequently Asked Questions About LETS Based on the experiences of South East Essex LETS in the UK (now Southend and District Time Exchange http://sostimebank.org.uk) Q) If I start with no credits, how can I trade? No problems. All LETS credits are created only by trading. Everyone’s account starts at zero, but you can spend straight away from your account because LETS is interest free. In fact for the scheme to work, at any one time a number of accounts have to be in debit. You just earn credits by doing work for other people, whenever it suits you. So you may start spending immeadiatly. Your account can go into debit, but no interest is charged, and there’s no fixed repayment schedule. There are no credit or debit limits, but to deter freeloading the balance and turnover of all accounts may be published twice a year. Q) What exactly is the credit, and what is it worth? There are no physical tokens; the units you create exist only as figures recorded in the LETS accounts. They are simply a way of measuring the value of services given. So when you have received a service, write a credit note for the agreed number of units. And price your own goods and services in local units. In many schemes, one LETS credit unit is loosely related to £1.00. It does not have exactly equal value to the pound sterling, because its purchasing power is limited to what is available on the scheme. Some groups use hours, or other measures. For more info see ‘Piers In A Nutshell’ Q) Am I supposed to find a direct exchange? Not at all. the reason for having an account is to enable you to earn LETS credits from any member, and spend them as and when you like with anyone else on the scheme. Q) How do I price my skills/goods? The choice is yours. Look in the directory to see what others are asking for their services. or you could base your charges on an average hourly wage, market ‘going rates’, or leave them open for negotiation. low prices may attract trade and likewise if your prices are too high you may get less trade. You are entitled to charge more for difficult jobs, or a high quality of service. whatever rates you decide to charge, you can always revise them for the next directory. Q) Do I have to trade when somebody calls me? There’s never any obligation, it is entirely up to you whether to respond to a particular request. if you’re ever unsure about a person’s qualifications to do a job, either ask them direct, or call the LETS office. Make sure you are clear in advance about the price and standard of workmanship being offered. Q) I don’t feel I have anything to offer... Many people’s reaction! One great advantage of LETS is that it helps people realise they do have things to offer. Whether they are skilled or not, their time, resources or equipment will be of value to someone. Just a few examples are artwork, house-minding, gardening, shopping, cooking, hiring a room, tools, books...Start by asking yourself what you enjoy doing. Or sit down with a friend and tell each other what you are good at....Or look at the inspiration list for ideas. Q) I still need cash... LETS can always be used along with cash. Ask for the cash required to cover the cost of materials, petrol or other cash costs, or for a proportion in cash (eg, 25%). Only the LETS part is recorded on your account. Q) What if I’m not satisfied with someone’s work? Minimise the chances of misunderstanding by agreeing clearly in advance the price, time-scale and expected standard of work. Also about qualifications and/or experience. You can also speak to others who have used that person’s services. LETS, like any other service directory, cannot take responsibility for the quality of what is on offer, so if in doubt, check it out first. If you have a problem and are unable to reach an agreement, contact a LETS arbitrator for help. Q) Couldn’t the scheme fold? Wouldn’t I lose out? It won’t, but if you’re really unsure you could keep your account balance below zero until you’ve gained confidence in LETS Q) Couldn’t somebody build up a huge debit, and then leave? LETS has built in safeguards. All balances and turnovers are published regularly, and members can ask to see the current balance and turnover of another’s account. If anyone has a large negative balance, and not much turnover, they can be investigated. A free- loader would easily be identified, and called to account- or be removed from the scheme in the last resort. If anybody goes further and further into debit and finds it difficult to earn enough credit to balance their account, they can get advice and support from the LETS organisers. They may be advised to offer more popular services, sell something or put a notification of ‘very keen to trade’ in the LETS directory. Q) Will LETS affect tax or benefits? Most trading on LETS to date is well below taxable income thresholds. People are doing irregular odd jobs, e.g. Repair work for one member, gardening for another. This ‘social favour’ level of trading is not of interest to the tax people. But when a member is conducting trade on LETS as part of a regular business, any net profits (after deducting business expenses and the personal allowance) will be tax deductible, in sterling, the amount depending on the individual case. Self- employed traders and shops must declare in their usual tax returns any LETS profits from work in their normal line of trade. They should give the amount a cash value. They can ensure that enough cash is available to cover both tax & VAT liabilities by making a percentage charge in sterling on LETS transactions. The welfare benefit rules are more complex, and are currently being considered by Central Government, so contact us for the latest position, but in general the majority of claimants should trade below 16 hours per week to keep their benefit entitlements. Q) How does LETS support local businesses? LETS helps small businesses and shops increase their customer base, and therefore their turnover, and extend their cash flow. Many businesses use barter networks to do this, but on LETS the service is not only cheaper, but since credit can only be spent locally the customer comes back again and again. Lets also creates new demand, since people who could not otherwise afford to buy at all can afford to pay partly in LETS. Other participating businesses and suppliers can be paid in LETS. It has kept small businesses afloat in recession, bringing in much needed extra work, and also attracting new customers who can pay in sterling. A number of new businesses, both full and part time, have started through LETS, assisted by the interest- free credit and supportive network it offers. See also *Why LETS sometimes doesn't work Category:LETS